How B.C. carriers should manage the country’s highest cost of fuel

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British Columbia’s trucking companies face a distinctly different set of market conditions that separate them from other Canadian carriers. Close proximity to North America’s third largest seaport by tonnage, treacherous mountain terrain and one of the country’s highest insurance rates are a few examples of the unique regional characteristics that distinguish this sector of the market.

The country’s highest cost of fuel
Of all the differences, the cost of diesel fuel is amongst the most notable and significant factors. British Columbia carriers typically encounter the nation’s highest cost of diesel fuel. This is due largely to the multi levels of taxation imposed on each liter dispensed. For example: in the province’s Lower Mainland, carriers pay a dedicated motor fuel tax to two separate authorities, a motor fuel general revenue tax to the province, a federal excise tax, HST and a carbon tax added on top of all that.

Improve profitability with cost control
Keeping a tight control on expenses is one of the biggest challenges of operating a profitable fleet. Every dollar earned in revenue is critically important, but only a small percentage reaches your bottom line. A dollar saved in operating costs however, goes directly to your earnings. Tight cost control is essential to ensuring the financial health of your trucking company. When carriers implement cost saving tactics, they gain immediate improvement to profitability.

Control your largest expense
Consider impact and control when identifying a strategy to manage your costs. Identify the costs that have the greatest impact on your overall expenses and which of these costs you have the ability to influence. Any expense items that score high in these two categories are prime examples of line items to focus on in your cost control plans. Representing well over a third of your operating costs per mile, the cost of diesel fuel is by far the most important cost to consider. You will create a significant positive impact to your profitability by lessening this expense.

An alternate strategy to improve profitability
In the past, a common course of action taken by many B.C trucking companies was to cross the US border to take advantage of lower fuel prices. However, this no longer serves as a valid strategy as the economies of both countries have changed dramatically and currency exchange now negates the cost advantage of previous years. Today, an alternative cost management strategy must be employed to improve your company’s profitability. The cost benefits provided by a fuel discount program that offers substantial savings will have a large and positive impact on your company’s bottom line. Until recently, this cost saving tactic was available only to larger fleets. Their purchasing power provided the leverage needed to negotiate a preferred rate with fuel suppliers. Today, this elite option is no longer the sole option of large carriers as innovative industry suppliers have emerged to better serve all trucking companies, large or small.

Aggressive fuel discounts for any fleet size
A new generation of invoice factoring companies, dedicated exclusively to the trucking industry, have risen to level the playing field with fuel discount fleet cards. By merging the collective usage of its entire customer base, an industry dedicated factoring company will have the have the purchasing volume and frequency needed to negotiate aggressive discounts with fuel suppliers. The factoring company will then pass these discounts onto their trucking clients. In this manner, one truck companies and small fleets have the same ability as the big carriers to pump diesel at lower than posted cash prices. As 90% of British Columbia’s carriers operate 5 trucks or fewer, this provides a considerable impact to the province’s trucking industry.

Track and analyze costs
It has been proven that costs are better controlled when they are tracked and analyzed. Fuel discount cards provide a simple and secure method for drivers to pay for fuel and for management to monitor and analyze spending activities as they occur. The ability to document detailed spending reports is a highly valuable tool in preparation for fuel tax reporting and at year end. Improving cost efficiency in this manner is a positive step forward towards increased sustainability and profitability.

The key is efficiency and control
A disciplined focus on operational efficiency and controlling costs are hallmarks of a profitable trucking company. Whether you operate a one truck company in B.C., a mid-size fleet in Alberta, or a larger operation in Ontario, the principle strategies need to be the same: control costs, maximize utilization and provide reliable service customers can depend on.
For more information about Fuel Discount Cards and the benefits of invoice factoring, visit Accutrac Capital online or call: 855-790-0906.

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Charles Sheppard is the co-founder and President of Accutrac Capital, an industry leading invoice factoring company specializing in the trucking space. Charles oversees the daily responsibilities of sales & marketing, back office operations and portfolio management. Prior to starting the company, Charles Sheppard accumulated 15 years of accounting and financial services experience including 6 years at the senior management level within the trucking industry. Together with his partner Ken Judd, they share over 40 years in the trucking space, including hands-on experience managing, owning and operating successful trucking companies. Charles’ intimate knowledge of financial and accounting issues, especially as it relates to the transportation industry combined with a close association with industry experts affords him unique insights and valuable perspectives for truck company owners seeking to maximize profitability.

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  • Charles,

    In addition, the Lower Mainland had a tax of $0.11 per litre to a point somewhere in the Langley area.

    That’s why most truckers fuel up at Chilliwack.